Voluntary Early Retirement Incentive Program January 27, 2015 Linda Byron, Partner, Aon Hewitt Susan Diep, Manager Compensation & Benefits

Today’s agenda  Program overview  Incentive options  What you need to consider  Online modelling tool demonstration  Questions

Program overview Monetary incentive to retire = 1 year reference salary Retire between July 1, 2015 and July 1, 2017 Does not change pension formula University must approve application Designed to help achieve budget reductions

Eligibility to apply By July 1, 2017 will you be… A full-time Laurier continuing employee in an applicable group (WLUSA/OSSTF, CPAG, PAG, Special Constables), Management? Yes At least age 60?Yes A pension plan member with a combined age and years of pensionable service at the University of at least 80? Yes Already participating in a phased in retirement or SVEP or on LTD benefits for more than 2 years? No

Application and approval process February 1, 2015February 28, 2015March 31, 2015 Fill out online “intent to apply” notification form Complete and return the paper application form University reviews applications and sends notification

Important! Applications are subject to University approval. Approved applications are irrevocable.

Your incentive options

Choose one of three incentive options Lump sum paid on your last pay at retirement date Salary continuance beginning up to one year before your retirement date Combination of salary continuance and lump sum amount or

Lump Sum option Continue to work up until retirement date Receive pension payments (or commuted value) Your retirement date Incentive paid as lump sum

Lump sum option PaymentsSingle amount paid at retirement date - qualifies as Retirement Allowance Income taxDeducted after applicable RRSP transfer, at lump sum rates (10 to 30%) CPP and EI deductions, Union Dues None Transfer to RRSPTransfer eligible portion without affecting contribution room, transfer non-eligible portion if RRSP room available BenefitsPost-retirement benefits (capped at $30,000 per year) PensionNo further contributions or service accrual

Salary Continuance Your program start date Receive salary continuance for 12 months Receive pension payments (or commuted value) Your retirement date Stop working

Salary continuance option PaymentsUp to 12 months of regular pay until retirement date Salary frozen during this period Income taxCalculated and deducted as normal earnings CPP and EI deductions, Union Dues Calculated and deducted as normal earnings BenefitsHealth, dental and basic life insurance benefits continue under active plan until retirement date. Employee-paid benefits (LTD, AD&D, Optional Life) will cease. PensionContributions and pensionable service accrual continue until retirement date Vacation and Sick LeaveVacation and sick leave accrual ends. Unused vacation will be paid out.

Combination option Your program start date Receive salary continuance for less than 12 months Receive pension payments (or commuted value) Your retirement date Balance of incentive paid as lump sum Stop working

What you need to consider

1. How does your age and pensionable service affect: when you can start the program what options are available for you

Example 1 – Meets requirements in 2015 Alex Turns age 60Feb 12, 2014 Reaches “80” factorMar 6, 2012 Earliest program start dateJuly 1, 2015 Latest retirement dateJuly 1, 2017 Salary continuance option12 months max Lump sum optionYes

Example 2 – Meets requirements in 2016 AlexPat Turns age 60Feb 12, 2014Nov 25, 2016 Reaches “80” factorMar 6, 2012May 5, 2014 Earliest program start dateJuly 1, 2015Dec 1, 2016 Latest retirement dateJuly 1, 2017 Salary continuance option12 months max7 months max Lump sum optionYes

Example 3 – Meets requirements in 2017 AlexPatTerry Turns age 60Feb 12, 2014Nov 25, 2016Sept 6, 2015 Reaches “80” factorMar 6, 2012May 5, 2014June 23, 2017 Earliest program start dateJuly 1, 2015Dec 1, 2016July 1, 2017 Latest retirement dateJuly 1, 2017 Salary continuance option12 months max7 months maxNo Lump sum optionYes

2. Does your normal retirement date fall within the incentive window? Do you want to retire on your normal retirement date?

You can keep working and retire at your normal retirement date Continue working until you reach age 65 (or later) Receive unreduced pension payments (or commuted value) Your normal retirement date Receive lump sum Today

Or take salary continuance for up to a year before retirement With salary continuance you continue to accrue pension benefits Receive unreduced pension payments (or commuted value) Your normal retirement date Full pension Your program start date Stop working

3. Are you thinking of retiring before your normal retirement date?

If you retire early, your pension benefit will be reduced: PensionReduction formulas for retirement age Money PurchaseAnnuity conversion factor rate is based on your age at retirement. Lower age = lower annuity Minimum GuaranteeFor each year prior to age 65, benefit is reduced: 1.5% for service prior to January 1, 2013 and 3% for service on and after January 1, 2013

Let’s look at an example for a member with final average earnings of $60,000. What difference will it make if the member retires immediately (takes the lump sum) or retires one year later (takes salary continuance)?

The reduction is blended based on the split between pre-2013 and post service The reduction is much less than the true actuarial “value” of the additional years of pension Takes lump sum and retires on July 1, 2016 Age 60 Takes salary continuance and retires on July 1, 2017 Age 61 Years of service2526 Estimated earned pension$22,100$22,800 Reduction applied8.6%7.0% Reduced annual pension$20,200$21,200 Difference-$1,000

4. What other sources of retirement income do you have? Pension from former employer(s) CPP & OAS benefitsRRSP Non-registered savings Real estateInheritance

5. What about health, dental and insurance benefits? With salary continuance, your health, dental and basic life insurance benefits continue under the active plan After retirement you receive retiree health & dental benefits ($30,000 cap on health ) Your retirement date Full or reduced pension Your program start date

Keep upcoming changes in mind January 1, 2016 January 1, 2017 University-paid Retiree benefits regardless of pension choice Receive Retiree benefits only if receiving monthly pension Retiree pays 15% of benefit premiums

6. Have you consulted your financial advisor? This is an important decision. You should review how it fits into your overall financial situation with your personal financial advisor.

Resources: Employee & Family Assistance Program E-courses and materials on retirement planning Plan Smart Lifestyle Counselling Services Online Pension Information Portal View your personalized pension information Run pension estimates for different retirement dates

Resources: Human Resources Questions regarding voluntary retirement incentive program Susan Diep – ext Mary Jo DaSilva – ext Laurier Pension Contact Centre Questions regarding pension estimate and options Trouble accessing online portal Toll-free at

The online pension modelling tool can help

Questions?